Amazon.com, Inc. (AMZN) is one of the largest Internet retailers in the world. Best Buy, Co. Inc. (BBY) is a leading retailer of consumer electronics and media products in the United States. Amazon and Best Buy compete in similar markets; however, Best Buy sells through both traditional retail stores and the Internet, while Amazon sells only through the Internet. Current asset and current liability information from recent financial statements are as follows (in millions):

Line Item Description	Amazon	Best Buy
Current assets:
Cash	$31,750	$1,980
Short-term investments	9,500
Accounts receivable	16,677	1,015
Inventories	17,174	5,409
Other current assets	-	466
Total current assets	$75,101	$8,870
Current liabilities:
Accounts payable	$38,192	$5,257
Other current liabilities	30,199	2,256
Total current liabilities	$68,391	$7,513

Required:

a. Compute working capital for each company. Amazon: fill in the blank 1 of 10$ million Best Buy: fill in the blank 2 of 10$ million

b. Compute the current ratio for each company. Round your answers to one decimal place. Amazon: fill in the blank 3 of 10 Best Buy: fill in the blank 4 of 10

c. Compute the quick ratio for each company. Round your answers to one decimal place. Amazon: fill in the blank 5 of 10 Best Buy: fill in the blank 6 of 10

d. Can the working capital be usefully compared between the two companies? Which of the following statements is correct.

Yes, working capital is a good measure for comparing the liquidity of two companies because both the companies belong to the same industry.No, working capital is not a good measure. Amazon's current assets are over eight times larger than Best Buy's. Thus, the comparison is not very meaningful.Yes, working capital is a good measure. Amazon's current assets are equal to that of Best Buy's. Thus, the comparison is very meaningful.No, the best measure for comparing the liquidity of two companies is to compare the profit and debt ratios.

e. Which company has the greater debt-paying ability according to the current ratio?

Best BuyAmazon

f. Which company has the greater short-term debt-paying ability according to the quick ratio?

Best BuyAmazon

g. Why are the results different between (e) and (f)? (Hint: Perform a vertical analysis of the current assets.) Round your answers to one decimal place. If an amount is zero, enter "0".

Line Item Description	Amazon	Best Buy
Current assets:
Cash	fill in the blank 10%	fill in the blank 11%
Short-term investments	fill in the blank 12%	fill in the blank 13%
Accounts receivable	fill in the blank 14%	fill in the blank 15%
Inventories	fill in the blank 16%	fill in the blank 17%
Other current assets	fill in the blank 18%	fill in the blank 19%
Total current assets	fill in the blank 20%	fill in the blank 21%

Amazon has fill in the blank 7 of 10% of its current assets consisting of cash and short-term investments, compared to fill in the blank 8 of 10% for Best Buy. This difference will fill in the blank 9 of 10

improveworsen

Amazons quick ratio relative to Best Buys. Best Buy has 61.0% of its current assets in inventory, while Amazon only has 22.9% of current assets in inventory. This difference reflects Amazons pure Internet strategy, which causes the current ratio to be fill in the blank 10 of 10

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than Best Buys. It also causes the relationship between the current and quick ratios to diverge between the two companies.